An advertiser, such as Ford™ or McDonald's™, generally contracts a creative agency for ads to be placed in various media for the advertiser's products. Such media may include TV, radio, Internet ads (e.g., sponsored search ads, banner display ads, textual ads, streaming ads, mobile phone ads, etc.) or print medium ads (e.g., ads in newspapers, magazines, posters, etc.). It is quite possible that the advertiser may engage one or more creative agencies that specialize in generating ads for one or more of the above media. A company wants to show the most relevant ads to end users in order to get the most value from their ad campaign.
Ads aimed at targeted users are prevalent in display advertising, which deals primarily with display ads (e.g., banner ads, etc.) published on pages of a portal web site (e.g., http://www.Yahoo.com). Ads aimed at targeted users may also appear on a page that includes sponsored search results. In early forms, sponsored search marketplaces, such as those provided by search engines like Yahoo!™, included ranking and pricing of ads based solely on advertisers' bid amounts associated with the keywords in a sponsored search auction. Display advertising and sponsored search are enormously profitable business sectors for marketplace providers, such as search engines like Yahoo!™.
However, marketplace provider (or search engine) revenue was influenced not only by bid amounts, but also by click-through-rates associated with the served ads. Recognizing this, ranking and pricing methods arose in which not only bid amount, but also click-through-rates associated with ads, became utilized as factors influencing ad ranking and pricing in sponsored search. By bringing the focus more on, and substantially increasing, search engine revenue, this new approach to ranking and pricing led to a huge increase in search engine profit from the already hugely profitable business of sponsored search. In addition, it may be viewed that, by increasing user clicks on ads, this change of focus and methodology also led to a more efficient, and healthier sponsored search marketplace overall, for the search engine, the advertisers, and the users (e.g., consumers).
In sponsored search, as in any other marketplaces, a company like Yahoo!™ must face limited resources and ever demanding market requirements. The inventory includes all advertising slots on search result pages. While the total supplies of slots may be large, the relevant and heavily searched and clicked slots are precious. Search engines face the challenge of placing the right ads in the right slots and maximize the utilization of the inventory.
Accordingly, advertisers are more and more interested in directing their ads to a target user segment. However, a number of users do not specify enough information about their profile. For example, about 50% of Yahoo!™ users do not specify their gender. As a result, it is difficult to target these users in aimed ad campaigns.